Tuesday, September 23, 2008

Are consoles going bye-bye? Server-based gaming means that ultimately, the devices don't matter. We speak at length with Trion CEO Lars Buttler about the huge funding he received and his vision for the future of games.

by James Brightman on Tuesday, September 23, 2008

Trion World Network, led by co-founder and CEO Lars Buttler (former vice president for Global Online at Electronic Arts), has yet to launch a product, and yet their vision for server-based gaming has clearly impressed investors. Today, the company has announced that it's raised another $70 million in Series C funding, which incredibly brings the company's funding total to more than $100 million (since 2006).

The latest round of funding was co-led by a large global financial institution and Act II Capital. Additionally, all previous investors participated in this round, including DCM, Trinity Ventures, Rustic Canyon, Time Warner, Peacock Equity (a joint venture between GE Commercial Finance's Media, Communications & Entertainment business and NBC Universal) and Bertelsmann.

Investors have cheered the server-based model that Trion believes will drive the future of the games industry.

"Trion's server-based games model is driving the future of interactive entertainment," said Peter W. Moran, a general partner of DCM. "Trion is liberating games and other forms of digital entertainment by taking them out of the package and putting them online where they constantly evolve for the end-user. Benefits for gamers, developers and publishers are seemingly endless."

"All the big publishers, including Microsoft, are talking about server-based games as the next big thing."

"Trion is set to redefine today's electronic entertainment sector through its ability to develop compelling broadband-connected games, innovative entertainment content and strong business relationships like its co-development deal with the SCI FI Channel," added Tom Byrne, managing director and group head, Peacock Equity. "We are focused on gaming as an attractive space and are pleased to deepen our relationship with Trion as they bring together the best of gaming, the Web and television."

For Buttler, the latest round of funding is not only a huge vote of confidence, but also affirmation that the industry is going to make a fundamental shift away from retail. "This signifies a shift away from static retail products and towards games as dynamic services which will be simulated increasingly 'in the cloud'," he said. "With its industry-defining server-based games platform, worldwide publishing capabilities, an ever-growing network of AAA development studios, unrivaled partnerships in media and technology, and now significant capital in the bank, Trion is uniquely positioned to be a leader in the next cycle of electronic entertainment."

GameDaily BIZ sat down with Buttler in New York prior to Trion's announcement. We could tell that he was truly ecstatic about his company's strategy and the major funding he'd just received.

"The market is in this huge transition from the first big business cycle in games – the first 30 years – where you really had games as retail products. It's packaged software; they can't be changed once they're done. [Now] thanks to broadband and connected devices it's become this huge business opportunity called games as a service, or server-based gaming. All the big publishers, including Microsoft, are talking about server-based games as the next big thing," Buttler began.

One of the reasons investors have give Trion a big vote of confidence is that the company has created the Trion Platform, a large-scale technological architecture that empowers companies to run "super high quality" games server-side. This is not the same thing as streaming the games, said Buttler, but it's very close. All the components that really drive the game – such as physics, transactions, world data, player data, AI, etc. – no longer reside in an individual client, PC or console, but are instead on a server.

We asked if this should be considered a major threat to retail just as digital distribution could be, but "It's not so black and white," said Buttler. "Whenever you create a new channel, the first thing people do is take their old content and distribute it in the new way – and this is really what game distribution online is all about today. It's still games made for the traditional packaged goods market mainly, but now they are also sold online. ... That's the first step only. It's analogous to when cable TV started – the first thing that happened was NBC and ABC were put on cable. We go much, much further and basically say, 'Content itself and all the business models around it and the development model is changed by broadband – not only distribution.' It doesn't make sense to take games made for a retail environment and just sell them online."